When planning for retirement, most folks think of the financials: building up an adequate nest egg, setting up multiple income streams, preparing for healthcare expenses and the like. In addition to the numbers-crunching, however, it's important to consider more intangible matters, such as where you want to live and what you want to do during your retirement years. Of course, your finances and lifestyle are linked. If you own your home mortgage-free and plan on staying local, for example, you may be able to get by on a much smaller sum than if you want to travel the world.
Making plans for your retirement lifestyle now – instead of waking up the day after you leave the office and thinking "now what?" – can ease the transition into retirement, help you prepare financially for the lifestyle you envision, and build yor motivation to save. Here are a few options to get you started.
One of the most important – and for some, the most difficult – retirement decisions involves where to live. The vast majority of retirees aged 55 to 65 (98.4%) either stay in their existing homes or make in-state moves, according to an analysis of U.S. Census Bureau data by Richard W. Johnson, director of the Urban Institute's Program on Retirement Policy.
Aging in Place
Why move? Many retirees opt for the status quo. One reason is that it might make financial sense to do so, especially if your home is in a market that has yet to recover from the drubbing that real estate took in the Great Recession. It may also be difficult to give up established professional and social networks in your community, plus any trusted service providers, from doctors to mechanics. Staying close to family, of course, is another reason – not just so you can spoil the grandkids, but because your children may eventually need to take an active role in caring for you as you age.
Even if you plan on staying in the same area, you might consider a change of venue. In many cases, this can be a smart move financially: If local real estate has rebounded, and you own your house outright, you could realize a tidy profit by selling. Plus, a place more suited to empty-nesters can reduce the amount of time and money needed to invest in upkeep. "Downsizing" doesn't have to mean drearier digs. It can involve moving into a stylish single-story house (easier on aging anatomies) with more modern amenities. Apartments are another good choice – as long as the upper floors are accessible by elevators (ideally at least two, so you'll never have to face stairs if one needs repair) – and most of the major maintenance is left to the homeowners' association or building management, not you. For details, see Avoid the Downsides of Downsizing in Retirement.
If you want to stay at home in the north – just not all the time – you might consider the snowbird lifestyle. In Retirement, Snowbirds Leave Cold Weather Behind: They spend part of the year (say, six months) at home, and the other part of the year someplace warm: Florida, California, Arizona, Hawaii. Depending on your financial situation and your preferences, your fair-weather residence might be a second home, a monthly rental, an RV or even a campground. Sometimes (especially if it's a state with more favorable taxes than your home location), retirees stay slightly more than six months so they can establish residence and save money.
Senior Living Communities
Senior communities are facilities designed for independent older adults who have either no, or only minor, medical issues. Numerous types of communities exist – from apartments to townhouses to RV parks. Some cater to a specific sporting activity, such as golf, tennis or boating. Communities typically offer a variety of amenities, including clubhouses, gyms, laundry service, group meals, social events and 24/7 emergency service. One particular subset, continuing care retirement communities (CCRCs) are designed to meet your changing needs as you age. They include comprehensive health services, assisted living options, and often skilled-nursing and memory care facilities, too. See How to Find the Right Retirement Community.
The Expatriate Life
A small but growing number of retirees head overseas in search of better climates, new adventures and, in some cases, a lower cost of living. Established expatriate communities exist all over the world – from every corner of Central and South America, to Europe, Asia and Australia. The expat lifestyle isn't for everyone, however. The culture shock, not to mention the need to learn a new language, can be enough to scare away all but the most adventurous of spirits. Of course, you can start slowly, living abroad on a part-time basis before committing to a permanent relocation. For more thoughts, see Plan Your Retirement Abroad and Things to Consider Before Retiring Abroad.
Many people enter retirement without any plans for filling their suddenly wide-open days. While that might sound restful after decades of meetings, deadlines and frantic schedules, no plans means you might end up literally doing nothing and that's not good for your mind or your health. Staying active mentally and physically – by meeting new friends, learning a new skill or mastering a new sport, for example – can improve your quality of life, your health and your overall retirement satisfaction.
While it may be hard to envision how you'll spend your days in the future when you hardly have time to focus on the present, it's an important part of the overall retirement process. For most people, staying active isn't something that just happens on its own (either now or in retirement). You have to make a plan for it, whether that means setting a goal to master standup paddle board and do it two miles a day, joining a weekly book club, or learning how to bake bread. If your interests run in another direction, it could mean embarking on a second career: see Best Freelancing Jobs For Retirees.
Besides the fun of imagining your future, there are pragmatic financial reasons to start picturing your retirement life. First, it can help you figure out how much you'll need to retire comfortably (you'll need more savings, for example, if your dream is to sail the Caribbean six months of the year). It can also keep you motivated to save: It's easier to put aside funds if it's not for some abstract principle, but for delayed gratification of something you really want to do. Finally, thinking about how you want to spend your retirement days can be a wakeup call for your current lifestyle: If you do want to standup paddle board two miles a day during retirement, you better be working on your fitness level now. You'll need those muscles.
It's worth noting that retirement lifestyles can and do evolve over time in response to our changing needs, interests and situation. You may begin your retirement years living as an expat in some exotic location, for example, and decide later to move back home to be near your family. Or you may envision aging in place, only to discover you would prefer the camaraderie of a senior living community. For more thoughts, see The 4 Phases of Retirement and How to Budget for Them.
Of course, the more comfortable you are financially, the more choices you'll have when deciding where to live and how to fill your days. No matter what your retirement budget looks like, though, it's helpful to think realistically about where and how you want to live as you age, and then make plans to make it happen.